Red hot Weiner's - Apparel Merchandising special supplement - Editorial

Dressed in an immaculate gray suit that stands in bold contrast to the dimly lit BBQ joint in which he's eating, Weiner's Stores president, ceo Herb Douglas explains his company's new merchandising strategies between bites of tangy brisket. The executive, who joined the Houston-based retailer two years ago, just weeks after stepping down as Jamesway's ceo, pauses for a moment to chew a piece of the sandwich and then looks around the truck stop eatery, located in a dusty suburb.

"Doesn't look a thing like Secaucus, [N.J.] here does it?" he chuckles, momentarily putting down his butter knife with which he's fastidiously sliced the saucy sandwich. "We've really come a long way."

It's a new state, a new setting and a new kind of retailer for Douglas, who landed in Houston after leaving the helm of Secaucus-based Jamesway when it liquidated in December of 1995. At Weiner's, a 128-unit operation, Douglas has painstakingly worked to steer the chain -- which serves much of Texas and Louisiana -- toward a different fate than the financial implosion that finished off Jamesway.

What was once a failing, bottom-of-the-barrel apparel store is now being transformed into a retailer that is defining its own niche. Not quite a discounter and not a department store, Weiner's has outlined a new kind of retail category: an apparel chain that seems to take on the attributes of a mini JCPenney. In doing so, Weiner's has become a retailer unique not only to the Southwest but also to the rest of the country -- a sort of Bob's Stores, but with an ethnic skew.

The fact that Douglas and his management team have been able to transform Weiner's and attract popular opening price point department store brands speaks volumes about the politics of the apparel business. Executives at Venture and Bradlees attempted to revamp their businesses in similar fashion but were unsuccessful in their attempts to create a non-mass market assortment. It was Weiner's relative obscurity, perhaps, that allowed Douglas and his group to succeed where these larger stores failed.

But Weiner's metamorphosis goes beyond a branding initiative. The lessons Douglas learned throughout the turnaround are applicable to the apparel departments at just about any discounter or other kind of retailer for the matter. Weiner's strategy can be boiled down to three basic points:

* Create a place for consumers to shop that caters specifically to their needs by utilizing niche marketing;

* Give consumers a store that is clean and easy to shop;

* Build the store in such a way that consumers can feel comfortable while they shop.

It sounds good on paper, but for Douglas it hasn't been an easy road.

The daunting task of turning around the once-bankrupt apparel chain is well on its way, and to get there, Douglas has relied on the help of a few old friends: Jamesway alumni Jerry Feller, vice president, gmm; Joe Kassa, vice president, sales, promotion, marketing and real estate; John Dineen, dmm. men's, children's; and Jim Berens, vice president, store operations. "The four J's from Jamesway," Douglas jokes.

In other words, the former management team from Jamesway is still together -- alive and kicking deep in the heart of Texas.

Now, more than two years after reassembling his old management team, Douglas has piloted the once family-owned, chain through an emergence from Chapter 11 (Aug. 26, 1997) and brought Weiner's public (to be traded on the NASDAQ starting this month). Throughout the turnaround, Douglas has overseen the redesign of the retailer's merchandising strategy, traded up the inventory and helped design a new, easier-to-shop prototype store. All of these efforts have helped to position the chain to compete against nearby foes such as Wal-Mart, Kmart, Target and Venture. What's more, it all seems on track and on schedule.

With sales in excess of $265 million for 1997, executives are forecasting a EBIDA profit for the first time in more than four years. Several lessons learned in the discount world have helped Douglas during Weiner's turnaround. "I guess some of the most important things from the discount sector that we utilize would be planograms, continual flow of merchandise, commodity items, repeat planning and customer service." Douglas adds that presentation and promotion are also carry-overs from his past experience.

A major difference between Weiner's overall business and stores like Wal-Mart or even Macy's is that Weiner's deals only in apparel. "Discount stores bring people in with detergents, paper goods and electronics. We don't have that option," Douglas says.

Jerry Feller adds: "You really have to figure out new ways to continually get consumers into the store. The question for us is: How do you bring them in with only a soft lines business?"

Although much of the mix contains apparel similar to that found at competitors, the merchandise also features a slew of labels not found in most discounters -- a quality that gives Weiner's a major edge when it comes down to basic survival.

"We're able to sell better merchandise at higher price points as part of the mix," Douglas notes during a store walk-through at a unit a few minutes away from the company's headquarters. "Our customer is mostly an African-American or Hispanic inner city resident, and labels are very important to them."

About 50 percent of the mix is what could be considered fashion merchandise. Men's accounts for about 30 percent of the overall assortment, with about 15 percent of that made up of denim from brands such as Levi's and Wrangler. Women's apparel, accessories and intimate apparel account for another 30 percent of the assortment, with about five percent ringing in as jeans business. Kid's makes up another 20 percent, and branded footwear from Nike, Fila, Adidas, Reebok and their ilk make up the remaining 20 percent.

The merchandise mix includes mass brands such as Fruit of the Loom, Hanes and Bestform, but it is complemented by higher-end core labels such as Nike, Fila, Reebok and Starter, as well as more urban brands such as Paco Jeans and older department store labels such as Bugle Boy. "We're able to sell Nike warm-ups from $80 to $100 and team jackets for up to $125," Feller notes. Footwear can sometimes run as much as $119.

For the most part, though, the average price point in the store hovers between $10 and $40 -- more expensive than neighboring discounters but well within range of the spending habits of Weisner's consumers. "They're willing to pay the few extra dollars for the brands," Fellers says.

Douglas cites Elliott Betesh, founder of the Secaucus, N.J.-based urban chain Dr. Jay's, as part of his inspiration for the Weiner's turnaround. "Elliott is my hero," Douglas jokes. "Seriously, what he's done in New York is incredible, and we feel in many ways that similar strategies might work here since we're catering to a similar customer." Currently, Betesh operates the Dr. Jay's/ Brooklyn U.S.A./Xpress chains throughout Manhattan, Brooklyn, Queens and Newark.

Part of Betesh's strategy has been to implement branded in-store shops throughout his stores, a concept Douglas hopes to implement in the near future at Weiner's. "We'd like to come up with shop concepts in our branded active area," he says. "Not necessarily permanent shops, but perhaps shops that rotate on a cyclical basis. Maybe one month it'll be Nike, the next Adidas, the next Reebok."

Douglas is quick to point out Weiner's clean and organized fixtures, computerized lighting and sleek merchandise groupings and presentation. "We're going to update the folded jeans fixtures even more next year," he says. The executive takes a stack of photos from one of his pocket and flips through them. The shots, taken in a Weiner's store when Douglas first joined, show pipe-rack fixtures hanging from the ceiling by knotted wires, broken shelving, dim lighting and, most importantly, masses of disorganized merchandise laying on the floor, hanging limply over the edge of shelves and twisted on racks.

"When we got here, the merchandise that was in the stores was more along the lines of special purchases, off-price goods and merchandise from some previous years that had been held over," Douglas says.

Management hired a customer research firm to conduct surveys for the store and get a better grip on consumer impressions of Weiner's. "What we found was extraordinary negative," he says. Most customers thought that Weiner's had old, defective, irregular merchandise of low quality. They said the stores were very difficult to shop, the sales associates were not friendly, and the return policy was not good.

Months later, when a store in Galveston, Texas, had been rebuilt after a fire with the new prototype design, the same consumers said Weiner's had beautiful, easy-to-shop stores with great merchandise, great fashion, nice people and a great return policy.

"These were the same employees, working in the store, with the same return policy," Douglas says. "So the things that were negative were really hurting us across the board."

Weiner's was founded in 1926 and remained in the family until Douglas took over. "The creditors wanted outside management," he says. "The wanted someone to run the company, someone who wasn't in the family." Currently, only one member of the Weiner family, Michael Klaiman (director of the shoe division), remains in the organisation. "I'm sure it was very hard for them to let it all go," Douglas says, referring to the two sons of the founder, Isidor Weiner, who ran the company prior to the bankruptcy. "Sol and Leon Weiner were true gentlemen and very helpful during the transition," Douglas says.

What hurt Weiner's most, and what ultimately landed the company in bankruptcy court, was the inability to compete in the early 1990s as national discounters began encroaching on its territory. The company was wounded by its lackluster presentations and dirty stores once consumers were given the opportunity to shop at nearby competitors. "There were tens of millions of square feet added to Texas' retail scene during the early 90s, and Weiner's never changed," Douglas says. "The stores were never renovated, and there was no new technology brought into the chain. No one had control of what was going onto the sales floor, and the company was run with an enormous inventory."

He adds, "The people in the company had been moving in the same direction for many years, and, unfortunately, in the 1990s that direction had changed." Douglas' new management policy included more discipline and more inventory control. "We had to do things differently from a timing point of view," he says.

Upon taking control, Weiner's new management team initiated a $40 million merchandise liquidation in order to clean out the stores and help raise capital for the chain's turnaround. The team also set up a vendor-intensive merchandising program rather than the company's old opportunistic buying strategy. This included cutting Weiner's vendor base by more than half. "By narrowing the vendor structure from 800 people to 400 people, we were able to give some vendors larger chunks of money and create much stronger, more meaningful relationships," Douglas says.

This included developing Weiner's branded offerings. "Our customers are into status," Douglas says. "We also have some value-oriented merchandise because they come from relatively low incomes, and we have to give them value, too." Value pricing, however, has gone from the majority of the business under the old regime to around only five percent of the overall mix.

A large part of the repositioning effort included remodeling most of the chain's stores starting in 1996 and finishing the remainder towards the end of 1997. Four new stores were also opened last year that utilized the company's new prototype design, which offers newer fixturing, clean lighting and jeans walls. The company is also planning to devote about $2 million to update its point-of-sale systems.

Promotion and marketing also took center stage in Weiner's reorganization. "When we took over, we found that there was so much dislike for our company that we felt we needed something to represent us that was extremely consumer-friendly," Douglas says. The result: Weinerman is born.

He's yellow and red, and with his super Weiner powers he can stop consumers from spending too much on branded items. Far-fetched and ridiculous? Douglas attests that Weiner's customers and the population of Houston in general stand behind their newest superhero. "We have an actor who actually dresses up the the character, and we've used him on TV and radio commercials. He visits stores and hospitals, and kids love him. We even sponsored a Weiner Night at the Astrodome, where weiners (of the hot dog variety) sell for a buck, and Weinerman runs around giving kids trinkets and stuff."

Back at the truckstop, Douglas is more content to focus on the remains of his authentic BBQ sandwich and a bucket of fries than discuss ways to compete against his rival's apparel departments. "They really don't have anything like this on the East Coast," he says. For a moment it's hard to determine whether he's still talking about the food or his business.

COPYRIGHT 1998 Lebhar-Friedman, Inc.
COPYRIGHT 2000 Gale Group